USAID PROJECT INDIA FISCAL MANAGEMENT REFORM PROJECT PROJECT STATE: JHARKHAND BACKGROUND The Project aims to strengthen institutional structures and management systems in three identified project states. This will enable and support the project states in making effective fiscal decision making and realistic budget preparations, based on accurate data and sound analysis. The project is expected to provide the necessary technical assistance and relevant training for upgrading as well as creating requisite capacities for fulfilling the objectives. The Project is being implemented by USAID, who has contracted Bearing Point, Inc., USA as their Prime Consultant. PROJECT COMMENCEMENT After consultations with the Ministry of Finance and State Governments, Bearing Point presented a Draft Inception Report for the Project in the Project Facilitating Committee on 19 March 2004. The Amended Version of the Inception Report was firmed up on 17 May 2004 and the approval of the State Action Plan was communicated by the Ministry of Finance on 10 June 2004. The project activities have, thereafter, been taken up in right earnest. REFORM ACTIVITY AREAS Macroeconomic and Revenue Analysis Expenditure Planning & Analysis Debt/Investment Management Treasury Development Human Resource Database/Pension Forecasting Procurement Process Development Development of Processes/Capacity for Evaluating and Managing Development Projects Design of Database for Tracking Socio-Economic Variables and Development of Capacity for Using Data to Produce Analyses of Policy Choices Build Capacity of Civil Servant Training Institutions PROJECT STATUS 1. Sri M. S. Bhatia, Special Secretary, Finance, Jharkhand attended a training program from 2 – 13 August 2004, in the Department of Economic Affairs, in Andrew Young School of Policy Studies, Georgia State University, Atlanta, USA. 2. Workshop on Project and Program Appraisal in the Public Sector, at Ranchi from August 23 – 28, 2004. Chief Secretary, Jharkhand inaugurated the workshop on 23rd August 2004, and forty 0fficials participated in the said program. This program was well received as was evidenced by a very enthusiastic response and a demand for further follow up sessions. Accordingly, the first follow up session has been slated for 27 September 2004 to 3rd October 2004. 3. Workshop on Tax Analysis and Revenue Forecasting at Ranchi from 8th September to 15 September 2004. Chief Secretary, Jharkhand inaugurated the workshop on 8th September 2004. Thirty participants, comprising of twenty-four Officials of Revenue Department and six representatives of Public Institutions participated in this program. The new approach of involving academic institutions was particularly useful in making the workshop a success. Thereafter, with regard to VAT Preparedness a number of programmes including Outreach program of Awareness and Education Campaign for VAT, Familiarization of existing MODVAT arrangements in Central Excise Offices etc. were taken up. 4. After detailed deliberations a Fiscal Policy analysis Cell (FPAC) has been set up in the Finance Department with a view of establishing capacities for Policy Analysis and research activities in the field of fiscal and financial management. A Debt Management and Investment Cell (DMIC) has been established to study the institutions and organizational set up, gaps in debts and investment management, extent of Contingent Liabilities, Risk Factors and parameters necessary to scrutinize the risks, level of financing and devolution of powers in the form of taxation, revenue empowerment of local bodies was proposed to be studied in depth. It is also proposed to study the system of accounting and keeping of records in Accountant General’s Office. An introductory workshop on Debt Management for FPAC and DMIC conducted on 26th April 2005. It was attended by 9 participants. 5. The existing Treasury operations and procedures and systems have also been evaluated. A draft Cash Flow Model based on Excel format has been developed. It is still to be firmed up and its acceptability and validity is yet to be demonstrated. After the validation exercise is completed, adoption and integration of the same in the Government. System of Accounting will be worked out. Accordingly, thereafter a program of its introduction in the Accounting System will be taken up. PROGRAM AND PERFORMANCE BUDGETING A Training Manual on Programme and Performance Budgeting is being developed. Capacity building programme will be conducted on the basis of this manual. A two-day workshop was organized on 12-13th July, 2005 to launch the PPB programme in Jharkhand which was attended by 13 full -time participants from Pilot departments of Social Welfare and Water Resources along with Finance, Human Resources Development, Health and Family Welfare and Rural Development. MACRO ECONOMIC/TAX FORECASTING CAPACITY BUILDING Workshop on Tax Analysis and Revenue Forecasting held from 8 to 15 Sept., 2004. Attended by 33 trainees. Training manual on “ Tax Analysis and Revenue Forecasting” developed by REFORM project and published by GOJ Workshop on Macro economic issues conducted from May 28-June3, 2005 to develop capacity in different departments of the state govt. and state civil services training institutes. PROJECT APPRAISAL CAPACITY BUILDING Training in Financial Analysis imparted in August-November, 2004. First round of case studies completed. Second round of training program on Economic and Stakeholder Analysis completed in April 2005. Case studies in process. Handholding and mentoring of case studies up to second stage i.e. economic analysis is expected to be conducted by September 2005. Training in Project Appraisal and Tax Analysis and Revenue Forecasting has been included in the training calendar of Sri Krishna Institute of Public Administration (SKIPA) and State Institute for Rural Development (SIRD). Training in Project Appraisal and Training in Tax Analysis and Revenue Forecasting shall be held at SIRD (Aug.-Sept., 2005) and SKIPA (Nov. 2005) respectively. It has also been decided with the concurrence of SKIPA to make the institution a repository of all training material, manuals, case studies, reports etc. prepared/ used by REFORM Project. Extending similar offer to SIRD is also being considered. CAPACITY BUILDING IN CIVIL SERVICE TRAINING INSTITUTIONS Two premier govt. institutions viz. Sri Krishna Institute of Public Administration (SKIPA) and State Institute of Rural Development (SIRD) have been taken up for capacity building. Assessment of their needs and training gaps has been done already and the draft report has been submitted. This will be finalized after detailed discussions and further steps would follow. Pending action in the light of the Needs Assessment Report, steps have already been taken to initiate training on fiscal issues in the institutions.
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